Like it or not, your business model speaks to your ethics

Business is about exchanging value. Crime is about taking value. Somewhere in
between is a value exchange that lies in the gray area; legal but sordid. The
gray area is where sleep is lost, or at least should be.

We recently discussed the
value of understanding at least 85% of a problem before starting work
.
As part of developing a business strategy, organizations should be scoping the
ethics and risks associated with any data collected or products offered with
the model they choose. Just as companies engineer up-front risk management
plans as they identify opportunities for success, business leaders should
consider the ethical consequences of their business models.

Why? The answers are all around us, written in almost daily reports of new
insights into the consequential behaviors of companies like Facebook, Equifax,
and Uber. There are plenty of examples in the technical business world of
these ethical shortcuts and their results both on companies' reputations and
bottom lines. Consider the business drawbacks Facebook is dealing with as of
spring 2018.

Mark Zuckerberg and his team positioned Facebook with the promise of
community and connection. They made it possible to bring networks of people
together. They allowed the elderly and the infirm to participate socially
outside the bounds of their physical confinement. They helped estranged family
members find each other again. In hundreds of ways, they made social
connections possible. This was always their message as they grew from the
dorm room to a global commodity and they gave this to their customers for free
as part of their vision of doing good.

However, as Facebook transitioned to an application platform, they failed
either to take into account or be concerned with the knowledge that blending
features of their ad platform with their app platform brought danger to their
users, who are ultimately not their business customers. The lack of
transparency into what they were making possible, the unwillingness to
acknowledge the damage they had contributed to, and the lack of clear,
centralized controls for users to manage their data access allowed bad actors
to pay to put this data to ill use.

Other public companies are in the same position; Google and Twitter both have
public-facing statements of good intent but find themselves in similar ethical
binds. Facebook represents a class of these companies, but one which has had
the most visible and damaging effects.

Business leaders can learn from these mistakes, intentional or otherwise, by
building into their business models a value system and adherence to an ethical
approach right from the start. Think of it as an investment bulwark against
the negative outcomes that would otherwise come from legal and publicity fees,
lost sales, and decline in employee morale and retention, to name a few. An
ethical foundation to business planning allows a company to focus all its
energy on positive growth and success.

Now Facebook gets to learn whether they can recover from their errors in
judgement and their disregard of ethical concerns in their business planning.
The question is whether they built enough of a financial buffer to allow them
to rework their business plan such that their users are partners in success
rather than being exploited for success, and whether Facebook is able to
implement a management and control system to enforce its platform policies.
They are
discovering the resulting dollar costs.

Facebook might currently be the most newsworthy, but it's not alone in its
example of how failure to plan for ethics can negatively affect the bottom
line. A whole slew of startups rose and died a few years back, modeling the
penny auction example of
Swoopo,
which auctioned off, among other goods,
literal gold bars to consumers who didn't understand they were gambling.
Startups rushed into the fraudulent space, substituting other front items,
such as expensive hotel suites, in an inevitable race to the bottom following
a business model that depended on a steady stream of new users to replace the
fleeced but newly educated previous customers.

Equifax
trapped millions of unsuspecting users
who never had any sort of
business contract with the company, forcing consumers into their sphere
without notice or recourse, accumulating financial data and through sheer
incompetence exposing that data to criminals.

The lesson today's business leaders should learn from the current mood of the
technical industry is that the chances for long-term success are enhanced when
companies plan ahead to avoid ethical pitfalls. A customer-centric approach
means reviewing the ramifications of every decision for how it may adversely
affect consumers, users, and anyone who engages with a business at any level.

We believe that business success is measured by longevity and the
sustainability of profits and revenues. This sustainability is firmly tied to
a company's ability to connect business needs to ethical and transparent
business models by clarifying how a product is built and monetized. The
founders and associates at Hyperfine are determined to help their clients
achieve this success while incorporating ethical considerations into each
step of their work. We believe in business as an exchange of value, where the
value is open, explicit, and without deceit. We invite you to join us.